Correlation Between Kalbe Farma and Midi Utama
Can any of the company-specific risk be diversified away by investing in both Kalbe Farma and Midi Utama at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Kalbe Farma and Midi Utama into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kalbe Farma Tbk and Midi Utama Indonesia, you can compare the effects of market volatilities on Kalbe Farma and Midi Utama and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Kalbe Farma with a short position of Midi Utama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kalbe Farma and Midi Utama.
Diversification Opportunities for Kalbe Farma and Midi Utama
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kalbe and Midi is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Kalbe Farma Tbk and Midi Utama Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midi Utama Indonesia and Kalbe Farma is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Kalbe Farma Tbk are associated (or correlated) with Midi Utama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midi Utama Indonesia has no effect on the direction of Kalbe Farma i.e., Kalbe Farma and Midi Utama go up and down completely randomly.
Pair Corralation between Kalbe Farma and Midi Utama
Assuming the 90 days trading horizon Kalbe Farma Tbk is expected to generate 1.1 times more return on investment than Midi Utama. However, Kalbe Farma is 1.1 times more volatile than Midi Utama Indonesia. It trades about -0.2 of its potential returns per unit of risk. Midi Utama Indonesia is currently generating about -0.35 per unit of risk. If you would invest 161,500 in Kalbe Farma Tbk on September 1, 2024 and sell it today you would lose (11,000) from holding Kalbe Farma Tbk or give up 6.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Kalbe Farma Tbk vs. Midi Utama Indonesia
Performance |
| Timeline |
| Kalbe Farma Tbk |
| Midi Utama Indonesia |
Kalbe Farma and Midi Utama Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kalbe Farma and Midi Utama
The main advantage of trading using opposite Kalbe Farma and Midi Utama positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kalbe Farma position performs unexpectedly, Midi Utama can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Midi Utama will offset losses from the drop in Midi Utama's long position.| Kalbe Farma vs. PT Indofood Sukses | Kalbe Farma vs. Unilever Indonesia Tbk | Kalbe Farma vs. Semen Indonesia Persero | Kalbe Farma vs. United Tractors Tbk |
| Midi Utama vs. Sumber Alfaria Trijaya | Midi Utama vs. Hero Supermarket Tbk | Midi Utama vs. Supra Boga Lestari | Midi Utama vs. Multi Indocitra Tbk |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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